SOTS 2nd Hour: Trump On The Hill, Google’s Existential Moment, and Home Depot’s Different Take On Tariffs 5/20/25

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Carl Quintanilla (0:59)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli here at Post 9 of the New York Stock Exchange, along with Sara Eisen, who joins today from CNBC's CEO Summit. David's on assignment at Tesla's Austin, Texas headquarters ahead of a huge, rare interview. You don't want to miss at 2 p.m. Eastern Time with Tesla CEO, Elon Musk. In the meantime, S&P, NDX both going for a six-day win, but bonds not necessarily playing along at the moment with the 10-year back above 4.5 and the 30-year approaching five once again. Ahead this hour, Alphabet kicking off its Google IO. Developers Conference. Big questions swirling around the company's future with search and AI. We're going to talk to a former Alphabet executive who now runs AI in quantum computing company Sandbox AQ. Plus a key reading on the state of the consumer from Home Depot. A very different tone from Walmart when it comes to tariffs today. We'll get you those details straight ahead.

Mike Santoli (1:51)

All right, we are 30 minutes into the trading session. And here are three big movers we are watching. D-Wave Quantum is jumping this morning after the company released its latest computing system, Advantage 2, which it says can solve complex problems beyond the reach of classical computers. You see the stock is up 18%. This has been one of those favorite kind of speculative quantum names in the market. Some moves in software as well. Loop Capital downgrading MongoDB to hold from buy on slower than expected AI tailwinds, while Evercore upgraded HPE to buy, as they call the risk reward levels favorable there. You see each one moving slightly in the direction indicated. And Levi Strauss is on the move as well. Following news, it will sell Dockers to Authentic Brands Group for more than $300 million. Levi's up 2.5%.

SPEAKER_8 (2:43)

Sara.

Sara Eisen (2:45)

Mike, I'm here at the CEO Council Summit out west. And look, annual gathering of CEOs from a cross section of industries. And I thought it would be all about tariffs and the new administration and re-regulation. But there's a lot of talk also about just changes in consumer behavior and consumer buying habits. That's been a big trend here as well. And yes, how to deal with some of the changes we're getting in Washington. Just wanted to bring you some color from some conversations we've had already on stage. The CEO of Taylor Morrison, for instance, Cheryl Palmer. They're now the fifth biggest home builder in the country.

Listen to what she said about credit profiles. She said, we are not seeing them challenged at all. In fact, their balance sheets are very, very healthy. Thought that was a pretty positive sign on the consumer. She said, yeah, the bigger question is, it's just, do I necessarily know what tomorrow brings? And am I prepared to make a big purchase like a home? But on consumer credit, strong. That same sentiment was echoed in a conversation on stage that we also had with Ernie Garcia, who is the CEO of Carvana, the used car, big seller. I think consumer credit, he says, looks pretty stable. I think something that's also true is that if you have a positive credit month, given all the kind of macro credit trend data, you're likely to see one-tenth of the stories that you see for the negative credit trend month. In other words, it gets more attention, but actually, underlying consumer credit looks strong. Mike, I bring it up because we're all wondering what's happening with the US consumer? Is all of that uncertainty going away and lead to a big drawdown of spending? Even Home Depot, just in the last hour on the call, the CEO said, the home owner remains healthy. For the most part, the home is the biggest asset and home prices continue to rise. So even if we do see sort of a slowdown from here, I think the backdrop is, this is not like prior recessions or prior periods of economic pain where we have seen more strained or stretched consumer credit and consumer balance sheets. And that's an important fact for the markets.